South Korea Crypto Exchanges Reportedly Reexamining Over 600 Tokens
Crypto exchanges operating in South Korea are reportedly preparing for an internal audit. As part of this process, more than 600 cryptocurrencies will reportedly be re-examined to see if they meet regulatory standards set by Seoul. The aim is to protect the South Korean investment community and financial ecosystem from risks posed by unregulated and volatile crypto assets. The exchanges will also conduct a maintenance review of their respective businesses to identify any security or cyber threats that may be hanging over their businesses, the report said.
South Korea to Identify Risky Tokens
In total, there are 29 crypto exchanges operating in South Korea, including Upbit, Bithumb, Coinone, Korbit, and Gopax. The decision by these exchanges to conduct audits on the crypto tokens traded on these exchanges is influenced by the Virtual Asset User Protection Act, which will go into effect in South Korea on June 19, a report according to the South Korean publication Chosun.
The crypto tokens that do not meet the regulatory standards will reportedly be delisted by exchanges. The exchanges would then provide information about the delisting to their respective user communities. Crypto tokens that were listed for less than six months would be given a strict warning to adhere to the regulatory requirements of the country before being removed from the trading lists.
“We will allow virtual asset exchanges to assess whether they want to maintain trading support for virtual asset items that have been traded for six months. It is inevitable that transaction support will be suspended for virtual asset items that do not meet the standards for maintaining transaction support,” the Chosun report quoted an anonymous source familiar with the matter as saying.
Token Evaluation Process
Crypto exchanges preparing for this internal investigation have reportedly outlined key points to ensure that all crypto assets are safe for investors to work with. Audits for these tokens will be conducted based on security, technology level, regulatory compliance, transaction support, and past operating history.
Transparency of virtual asset operations, market capitalization, as well as total issuance and circulating volume are other parameters tied to over 600 tokens reportedly being analyzed by exchanges. The exchanges will reportedly institute an alternative screening method for cryptocurrencies issued by decentralized organizations (DAOs) — which may be difficult to trade in South Korea.
In addition, South Korea’s Virtual Asset User Protection Act requires all exchanges to conduct internal maintenance reviews every three months.
South Korea Tackles Risky Crypto Habits
The Asian nation has been quite pro-crypto in its approach to the digital asset sector, despite the risks involved. From South Korean banks entering metaverse ecosystems to authorities approving licenses for crypto companies looking to set up shop there, the nation has taken many pro-Web3 steps. The nation categorized blockchain-based tokens as “Securities” in February 2023, bringing them under its Securities laws.
However, it is noteworthy that the government there has remained vigilant in terms of monitoring industry players involved in the virtual assets sector. In April 2022, authorities conducted investigations into exchanges such as KuCoin and Coinex to check whether their activities were legal or not.
In January 2024, South Korean authorities reported that purchasing cryptocurrencies via credit cards could soon be banned in South Korea.
